Alcatel-Lucent Weighs Sale of Patents to Increase Cash

By Manuel Baigorri and Marie Mawad -
Nov 16, 2012

Alcatel-Lucent SA (ALU), the French phone-
equipment maker considering asset sales to bolster its finances,
is weighing a disposal of some secondary patents as the company
seeks ways out of a streak of quarterly losses and a shrinking
cash pile, its chief financial officer said.

“We can look to monetize that portfolio through licensing,
through limited sales if those patents aren’t part of our core
and a few other things,” Paul Tufano said yesterday in an
interview at a conference organized by Morgan Stanley in
Barcelona. “We look at all of the above.”

Alcatel-Lucent, based in Paris, has almost 30,000 patents
and 15,000 patent applications pending, Tufano said.

“It’s a broad variety of technologies that we cover,” he
said. “It will be hard to find a company with as broad a patent
portfolio as ours, so I think it’s very attractive and there’s a
lot of interest and there could be a lot of interest from a lot
of different sources.”

Chief Executive Officer Ben Verwaayen, in his fifth year in
the job, is struggling to turn Alcatel-Lucent around as European
phone companies spend less and Asian rivals add pressure. The
more than 2 billion euros ($2.6 billion) of debt due over the
next three years is hampering the former BT Group Plc (BT/A) CEO’s
turnaround efforts as thousands of job cuts have failed to stem
losses.

Shares Gain

The shares added 0.8 percent to 84 cents at 9:06 a.m. in
Paris. They have plummeted about 80 percent since Verwaayen took
over in September 2008. The 60-year-old hasn’t reached his goal
of making Alcatel-Lucent sustainably profitable, and this month
reported a third-quarter loss of 146 million euros.

Verwaayen’s efforts to shore up cash flow included a
licensing agreement announced in February, which the company
expects will deliver several hundred million euros. Alcatel-
Lucent hasn’t disclosed revenue from the contract.

The CEO had so far said that the company would not look to
sell its patents, which include voice-recognition and video-
conferencing technology.

Last quarter, Alcatel-Lucent consumed 360 million euros of
cash. Its cash reserve has diminished by an average of 700
million euros a year since Verwaayen took over from former
chiefs Patricia Russo and Serge Tchuruk, who oversaw the merger
of Alcatel SA and Lucent Technologies Inc. in 2006.